I think there are two sides to this story (about how large banks are gobbling up deposits and regional banks are flat or declining) and both of them are very technically-inflected: https://www.wsj.com/articles/the-biggest-banks-are-gobbling-up-deposits-heres-whos-not-1524999612 … (for further analysis, see here: https://www.crnrstone.com/insightvault/2018/05/01/fis-need-big-banks-deposit-domination/ … ) The sides:
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Businesses have massive shedloads of money. They have much bigger money problems than households do. These problems come under the general heading of "treasury management" and include everything from managing payouts to having appropriate liquid funds to maximizing interest.
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Treasury is an unsung competence at a lot of businesses, and generally viewed as a bit of a distraction from whatever they do well, so historically a quite common strategy was "Pfft, whatever, we'll keep most of it in our main checking account. That bank gets the deposits."
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(Background common knowledge: banks will generally offer a trade like "We'll pay you a better interest rate on that deposit if you lock it into a certificate of deposit (CD) with us for a longer term; this guarantees us longer-term funding for writing longer-term loans.")
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This was a sensible strategy for treasury folks when moving money around was friction-ful, but since they can now administer 8 accounts at different institutions about as easy as one account (remember: literally their job) on their own doesn't-suck-at-being-a-computer...
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... they can afford to say "Wait, goodness, I have *ten million dollars* to place. It is *exactly* as easy to put it in a money market fund at
$FOO as it is to buy a CD at your bank. The MMF *strictly dominates* your offering. Why. Would. I. Do. That."Show this thread -
Anyhow, a quote I like from the analysis article (linked above): > Checking accounts have become "paycheck motels"--temporary places for people's money to stay before it moves on to bigger and better places.
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For at least some consumers there is a precarity angle to that statement, but the classes which historically kept materially-sized balances in checking just have better options these days, and no particular social reason to let banks use them as a low-cost funding source.
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End of conversation
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